Ultimate Guide to Business Process Management
An organization or company will not be able to function or operate smoothly without a solid structure in place, and in that structure are sets of business processes that must be followed and carried out like clockwork to ensure that the business or organizational goals are achieved. This calls for actions to optimize said business processes, and it is aptly called “business process management”, one of the more important fields in operations management.
In this article, we will explore 1) the business process management (BMP), 2) BMP frameworks, 3) the BMP life cycle, and 4) some BMP examples.
BUSINESS PROCESS MANAGEMENT (BMP)
Business Process Management, or BPM, is a systematic methodology that is implemented to optimize the business processes of an organization to enable it to achieve its goals or objectives. The expected results from this optimization include more effective processes or work flows and more efficient operations that translate to lower costs and higher revenues, and greater adaptability of the organization even in the face of volatile working conditions and economic environment.
Business processes are bound to have stumbling blocks, and the two most common blocks include human error on the part of the members of the organization – partly due to faulty communication, or a lack thereof – and the stakeholders losing sight or focus of their duties and responsibilities in the organization. Some of the problems often encountered in an organization include operational inefficiencies and unnecessary wastage, lack of optimization of the workforce, low retention rate of customers, and difficulty when it comes to compliance with rules and regulations. BPM aims to solve these problems.
By paying attention to managing the business processes, human error will be reduced or eliminated completely, communication will be improved, and the stakeholders will be reminded time and again of the vital roles that they have to play in the grand scheme of things. Simply put, BPM is all about institutionalizing better methods or ways to get a job done.
You may have come across many articles referring to BPM as a technology; they are not completely wrong, but it is better to clear things up a bit. BPM is a discipline – an activity, and a practice that is undertaken by businesses, using tools and technology. There is BPM technology, but for purposes of this discussion, we will talk about the discipline, not the technology.
Today, there are three different BPM frameworks that are often seen at work in various types of organizations.
1. Horizontal BPM framework
This framework mainly deals with the design of business process and their subsequent development. More often than not, you will find this framework focused on using technology in order to design and develop business processes. It may be the formulation of new technology to come up with new business processes, or the reuse of already existing technology in order to improve already existing business processes.
This framework provides BPM solutions that can be applied across several different industries.
2. Vertical BPM framework
The focus of this framework is a specific set of coordinated tasks for each and every business process. It often makes use of pre-made templates. The templates are already there, but the organization may perform some tweaks here and there with its configuration, before launching it for full utilization.
The BPM solutions in this type of framework will work only to specific or particular industry or process types.
3. Full-service BPM framework
You can say that the full-service framework is a combination of the two earlier frameworks. It has all the required components for the management of business processes.
There are five components found in this type of framework:
- Process discovery and project scoping
- Process modeling and design
- Business rules engine
- Workflow engine
- Simulation and testing
THE BPM LIFE CYCLE
BPM has been defined as something that is systematic; thus, there is a certain order to it, and cannot be done randomly. In order to fully understand the steps, it would be better to gain a full picture of the BPM life cycle instead.
Before we proceed, however, it is important to look at the parties or individuals responsible for BPM. Who is involved in BPM?
Many would think that all the members of an organization, from top management down to the rank-and-file employees, are involved. Anyone who makes suggestions on how to improve a certain phase of the business operations or the production process is already involved with BPM.
While that sounds good, it is not really applicable for BPM in its strictest sense. BPM is performed only by individuals who are primarily concerned with looking into the business processes with the specific objective of improving them. While it is true that they will go out to the different parts of the organization to ask for input and feedback from employees and staff members, that does not make the latter directly involved with BPM activities.
Usually, a company forms its own Process Management team, designated to solely concentrate on determining the processes needed for improvement. Each member of the Process Management Team will have their roles and responsibilities clearly defined. Similarly, the stakeholders who will be directly (and even indirectly) impacted by the whole process will also have to be identified.
Now the life cycle of a BPM project is often broken down into four stages: Modeling, Implementation, Monitoring and Improvement. This time, though, we will break it down into 5 phases.
Phase 1: Analysis and Design
Analysis is required in order to figure out what new processes are required, and which among the existing processes need to be modified, or completely removed.
Study and assess the current process flow – its components and mechanisms as well as its strengths and its weaknesses. This includes identification of the existing processes or the processes already in place; and the particularly weak areas of the whole process flow.
From the results of the analysis, identify the processes that ought to be in place. Taking them all together, you can come up with a theoretical design that is technically more correct than the existing one and, more importantly, more effective and efficient.
It is also during the analysis stage that the barriers and expected blockages that will prevent the process management team from realizing their goal. Analyze the root cause of these barriers, as well as the direct sources of the blockages so you will know what to aim for when designing or redesigning a process.
The output of the first phase is an efficient theoretical design.
Phase 2: Modeling
The theoretical design that you were able to come up with will now be put to the test with the introduction of variables that will determine how the new process will fare, react, or operate. In essence, it is a simulation where the process will be made to function under different scenarios or conditions.
In this phase, management will be able to understand the concept of the whole process and how it works. You will basically come up with a representation, or a model, of the entire process in order to support communication to stakeholders about it.
There are several ways to model, there is no fixed or standard way to do it. It would be up to the management to choose how to perform modeling of the process, as long as the set of pertinent activities is completely covered. There are also several Business Process Modeling Tools around, which are basically software that can be used by business analysts and managers to come up with diagrams that represent or depict the business processes.
Phase 3: Execution / Implementation
Implementing the steps of the process almost often requires automation, a task that many businesses, especially smaller ones and startups, find too daunting to undertake. As a result, many skip this step, and this completely defeats the purpose of BPM. It is during this stage that some parts of the process are commenced and brought to interact with end users.
In order to execute the steps of the process, some of the methods that companies employ include:
- Development or acquisition of a software or an application
- Combining software and manual (human intervention) methods
Fortunately, there are now a number of software developed primarily for the execution of full business processes, programmed accordingly for use in computers and similar devices. Be careful, though: the application or software is not BPM. It might be a result of the BPM activity, but it is simply a part of BPM and not BPM itself.
The choice of which method to use will ultimately depend on the nature of the business operation or process being implemented. Once a method has been decided on, it is time to develop solutions and prioritize them. Afterwards, try to identify the impact of the solutions on those who will be subjected in any way to the process.
Automation is an action that is often seen in BPM, for the simple reason that automation eliminates repetitive steps and effectively cuts down valuable time and resources that may be devoted to other tasks or processes.
This is where one of the biggest misconceptions about BPM comes in. Many immediately assume that BPM is all about automating a process. Automating is just a part of the process because, at its core, BPM is all about improving business processes, fully recognizing that automation is one of the ways to go about it.
Phase 4: Monitoring and Control
Once the processes have been implemented, many businesses stop there, thinking that they should let the “processes do their thing”. This is a bad business decision.
Each of the processes will have to be tracked, in order to ensure that the process is following the course it was designed to. It is also so that an objective evaluation of each can be made. The key performance indicators are measured in order to see how the process performance went. The information obtained regarding the performance of the process put in place will be used in identifying the areas where there are actual bottlenecks (and even potential inefficiencies).
Aside from being able to tell whether the new processes are effective or not, monitoring will also arm the management with information that they can later use in order to improve on the other processes that are directly and indirectly connected or related.
Phase 5: Optimization and Re-engineering
The information gathered during monitoring will have to be put to use, and that is called process optimization. This is also where management will identify opportunities to generate more revenue or reduce costs. In the earlier step, the management was able to identify where the inefficiencies are; this time, it will be able to take action to reduce these bottlenecks.
More than trial-and-error, the what-if simulations conducted during process optimization are meant to determine which of the processes – or the changes to existing processes – are able to deliver the most benefits. It also gives management a lot of room and leeway to fine-tune and polish the process.
Of course, it is also highly possible that optimization will not completely solve the problem, and that re-engineering would be the better solution. Re-engineering entails working over the whole process cycle, so management will have to go back to square one and figure out where it went wrong.
It is important to put emphasis on the fact that the term “optimization” implies something that is ongoing. Take note that BPM is a “cycle”; once the cycle is finished, it starts all over again. This means that BPM is not a one-time thing. Just because it was already done does not mean that the organization will completely forget all about it. BPM is a continuous exercise, since there is a need for monitoring and evaluation of the applied processes, so the necessary changes and adaptive tweaks can be applied.
It is also to be noted that the goals of an organization may gradually change, so there is a need to make sure that the business processes remain aligned or in keeping with the goals. Hence, the need for optimization.
This does not mean, however, that everyone follows it as a cycle. In larger corporations and more complex organizations, the process is limited to only a couple or more iterations and not the whole cycle. Still, continuous business process improvement is highly recommended for all businesses – complex setup or otherwise – if they really want to achieve their organizational goals.
The importance of performing it on a continuous basis is for the organization to be able to quickly change the process if and when necessary.
The BPM solution is geared towards providing the sales team and the marketing team of a company with applications that are designed specifically to cut down time spent on several sales and marketing processes. This effectively streamlines the whole process of communicating with the target market and turning the prospective customers into actual buyers.
For example, the facilities for customer inquiries is made much simpler, providing customers with more direct modes of contacting the sales support team. Product launches are also scheduled at more reasonable intervals, instead of randomly launching them when they are available.
Customer service is also one area in any industry that requires a lot of attention. Many BPM actions are taken purposefully to fix problems related to customer relationship management. This is in connection with the actions of the marketing team, so one solution is to make sure that the activities of the customer service or after-sales division is fully aligned with that of the marketing team. In some companies, some of their solutions include setting up help desks, fast-tracking credit approvals, improving fraud assessment facilities, and even setting up service call centers.
Manufacturing concerns have to deal with suppliers, contractors and subcontractors on a regular basis. A BPM solution that will increase and maximize the profitability of the company would focus on inventory management, planning purchases and tracking disbursements on said purchases. It also entails building stable relationships with suppliers and contractors in order to facilitate the purchasing process.
Therefore, one good way to increase efficiencies in this area would be to come up with a faster way to process purchase requisitions, warehousing, billing, invoicing, and tracking the movement of inventory in and out of the warehouse or stock room, and into the production facility or factory. For example, the company can conduct research on the different suppliers and the logistics involved, so they can narrow down a more efficient procurement list.
BPM is also applicable when the research and development arm of the company is tasked to come up with new products or innovations to its existing product line. This would require taking a closer look at the production process, and find ways so that rework costs are reduced or completely eliminated.
Take, for example, a bank scenario. Queues are generally frowned upon and avoided by clients, so they look for banks that are able to entertain new clients quickly. A bank will employ BPM in order to decrease the time needed to gain approval for opening an account with the bank. Instead of the usual two to three days’ wait for approval, clients need only wait for minutes to have their new accounts approved and opened.
“Success is more permanent when you achieve it without destroying your principles.” – Walter …